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BAC Salvador – Support for the “Mujer Acelera” Program

Project number 12824-02
Country El Salvador
Sector Financial Institutions
Status In implementation

Basic information

Company name
Banco de América Central, S.A. El Salvador
Investment type Loan
E&S category
FI-3
Disclosed date
Projected board date
Approval date
Signed date
Team Leader
Guevara Sanchez, Marvin

Financial Summary

Financing amount $ 60,000,000
Financing Currency
USD

Client
information

Client Contact Name: Rodrigo Menéndez Aguilar
Title: Vice President – Corporate Banking
Email: rodrigo_menendez@baccredomatic.sv

PROJECT
SCOPE
AND
OBJECTIVE

The proposed financing consists of an unsecured senior loan denominated in U.S. dollars (“US$”) to Banco de América Central, S.A. (“BAC El Salvador” or “the Bank") of up to US$60 million, comprising: (i) an “A” loan from IDB Invest of up to US$40 million with a term of five years; and (ii) a loan from the China Co-financing Fund for Latin America and the Caribbean (“China Fund”) of up to US$20 million (the “Financing”) with the same term. The transaction will support the growth of BAC El Salvador’s “Mujer Acelera” program by providing financing to women led/owned small and medium-sized enterprises (“SMEs”). The project is additionally expected to include advisory services to strengthen the Mujer Acelera program, as well as to support this segment in adopting new operating procedures in the context of the COVID-19 crisis through training sessions, virtual advice, and financial support (provided BAC ES has analyzed these options).

Environmental
and
Social
Review

  1. Scope of Environmental and Social Review. The environmental and social ("E&S") analysis of the proposed operation consisted of reviewing the documentation on the portfolio and E&S processes, as well as holding conversations with BAC El Salvador representatives over the course of two days of due diligence with the management and risk teams. BAC El Salvador is a current IDB Invest client.
  2. Environmental and Social Categorization and Rationale. The proposed transaction is classified FI-3 pursuant to IDB Invest’s sustainability policy. The potential risk of the subprojects to be supported is low, which is to say that the subloans granted by BAC El Salvador are expected to involve commercial activities the majority of which have minimal or no adverse environmental and social impacts. All the subloans to be granted by BAC El Salvador with IDB Invest funds will go to women-led/owned SMEs. BAC El Salvador defines small enterprises as those with annual sales of between US$130,000 and US$2 million; it defines medium-sized enterprises as those with annual sales of between US$2 million and US$7 million. The largest sectors represented in its SME portfolio are commerce (67%), services (19%), and industry (10%). The average term of the SME portfolio is eight years, with an average loan size of US$70,000. The IDB Invest proceeds will not be used by BAC El Salvador to finance Category A (high-risk) subprojects or projects within sectors included on the IDB Invest exclusion list. Environmental and Social Risks and Impacts. The environmental and social (E&S) risks of this transaction are related to BAC El Salvador’s capacity to evaluate and manage the risks associated with its investments. BAC El Salvador has had a corporate system for environmental and social risk analysis ("SARAS") in place since 2015. The SARAS applies a local exclusion list to all its loans, and the SARAS is activated for client exposure equal to or greater than US$1 million.  However, according to the credit manager, business executives verify that all loans comply with the national exclusion list and environmental and social legislation. Business executives receive training twice a year, organized by region in El Salvador, on the SARAS and the requirements of national environmental and social regulations. The credit manager has an individual in charge of environmental and social issues who is responsible for training the 38 business executives. 
  3. Mitigation measures. The financing granted by BAC El Salvador must comply with IDB Invest’s exclusion list and with applicable local and national environmental and social laws.  In order for BAC El Salvador to have a better understanding of IDB Invest’s requirements, the personnel in charge of supervising and implementing the SARAS must take IDB Invest’s virtual course for financial intermediaries.[1] The “Environmental and Social Management Systems” virtual course will help BAC El Salvador personnel to include environmental and social practices in the bank’s risk management processes.
  4. Environmental and Social Action Plan ("ESAP"). Not applicable.
  5. Contact information For questions about projects, including environmental and social issues associated with an IDB Invest transaction, please contact the client (see Investment Summary) or IDB Invest through e-mail requestinformation@idbinvest.org. As a last resort, affected communities have access to IDB Invest’s Independent Consultation and Investigation Mechanism through mecanismo@iadb.org or MICI@iadb.org, or by calling +1(202) 623-3952.
 

[1] https://cursos.iadb.org/es/indes/sistema-de-gesti-n-ambiental-y-social-una-oportunidad-de-negocio

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